Message on speculation starting to sink in
Analysis by Chris Graham
We were getting it even before we heard that Exxon-Mobil was reporting a record second-quarter profit.
Recent polling done by Rasmussen Reports and AAA Mid-Atlantic shows that Americans think that we should focus our efforts on excessive futures-market speculation as we approach solutions to high prices at the pump. Forty-seven percent of respondents to the AAA poll listed commodity speculators as the answer to the question, “Who’s to blame for high gas prices?” Respondents to the AAA poll were able to provide up to three answers. Congress preventing more domestic drilling was the second most-popular answer at 40 percent.
The Rasmussen poll showed a similar split, with 45 percent of those surveyed saying that placing more restrictions on energy speculators is more important in terms of finding an answer to high fuel prices, and 42 percent saying that offshore drilling should be the focal point.
The average price of a gallon on regular unleaded gasoline in Virginia is $3.82 today, down from $3.98 a gallon a month ago and up from the $2.76 a gallon that we paid a year ago today.
Some economists are saying that speculation in unregulated futures markets is adding 30 to 50 percent to the cost of a barrel of oil, which itself accounts for 75 percent of the cost of a gallon of gasoline. Curbing the effect of speculation on oil prices could thus drop 75 cents to a dollar per gallon off the price we’re paying at the pump. Meanwhile, analysts suggest that domestic drilling would not be likely to have an impact on gas prices for at least 10 years, with the Department of Energy projecting that a substantive impact would not be noticed until 2030.